MANAGEMENT DISCUSSION & ANALYSIS REPORT
ECONOMIC OVERVIEW
Overview: The global economy was estimated to have grown at a slower 3.20% in 2022,
compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic
effect). The relatively slow global growth of 2022 was marked by the Russian invasion of
Ukraine, unprecedented inflation, pandemic induced slowdown in China, higher interest
rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve. The
challenges of 2022 translated into moderated spending, disrupted trade and increased
energy costs. Global inflation was 8.80% in 2022, among the highest in decades. US
consumer prices increased about 6.50% in 2022, the highest in four decades. The Federal
Reserve raised its benchmark interest rate to its highest in 15 years. The result is that
the world ended in 2022 concerned that the following year would be slower. Gross FDI
inflows - equity, reinvested earnings and other capital - declined 8.4% to $55.3 billion
in April December. The decline was even sharper in the case of FDI inflows as equity -
these fell 15% to $36.75 billion between April and December 2022. Global trade expanded by
2.7% in 2022 (expected to slow to 1.7% in 2023).
The global economy is projected to grow a weak 2.9% in 2023, marked by sustained Russia
Ukraine convict and higher interest rates. Global inflation is projected to be 6.5% in
2023 (Source: IMF). On the positive side, the reopening of Chinas economy after the
waning of the pandemic, the decline in the European energy crisis and robust US
consumption outlook (despite high inflation) remain positives. Interestingly, even as the
global economy is projected to grow less than 3% for five years, India and China are
likely to account for half the global growth in 2023 (IMF).
Indian economic review Overview: Even as the global conflict remained
geographically distant from India, ripples comprised increased oil import bills,
inflation, cautious government and a sluggish equity market. India reported an estimated
economic growth of 6.8% in FY 2022-23. India emerged as the second fastest growing G20
economy in FY 2022- 23. India had retained its position as the fifth-largest global
economy and was seen as a principal driver of the global economy (with China)
India moved up in the Ease of Doing Business (EODB) rankings from 100th in 2017 to 63rd
in 2022.
In 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than
the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1 percent Y-o-Y
in FY 2022-23. The total gross collection for FY 2022-23 was 18.10 lakh crore, an average
of 1.51 lakh a month and up 22% from FY22.
Indias monthly goods and services tax (GST) collections hit the second highest ever in
March 2023 to 1.6 lakh crore. For 2022-23, the government collected 16.61 lakh crore in
direct taxes, according to data from the Finance Ministry. This amount is 17.6 percent
more than what was collected in the previous scale. Per capita income almost doubled in
nine years to 172,000 during the year under review, a rise of 15.8 percent over the
previous year. Indias GDP per capita was 2,320 USD (March 2023), close to the magicube of
$2500 when consumption spikes across countries.
India is expected to grow 6.8% in FY2024, catalyzed in no small measure by 35% capital
expenditure growth by the government. The growth could also be driven by broad-based
credit expansion, better capacity utilization and improving trade deceits Headline and
core inflation rates could trend down. Private sector investments could revive.
1. FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements based on certain assumptions and
expectations of future events. The Company, therefore, cannot guarantee that these
assumptions and expectations are accurate or will be authorize. The Companys actual
results, performance or achievements can thus differ materially from those projected in
any such forward-looking statements. The Company assumes no responsibility to publicly
amend, modify or revise any forward-looking statements, on the basis of any subsequent
developments, information or events.
2. INDUSTRY STRUCTURES & DEVELOPMENTS
As natural resources are limited, recycling has gained attention worldwide. Now
companies are articulating a vision of using greater portion of recycled material in their
products and formulations. The rubber industry is not an exception to this. End of life
tires are an important source of recycled rubber worldwide and its status has changed from
waste to resource. The reclaim rubber industry has been developed around this reality.
A show-case project of benefits of circular economy. Actively promotes re-use of
products derived from end-life- tires (ELTs) into new tires, conveyor belts, road
construction etc.
3. OPPORTUNITIES & THREATS:
Opportunities
In light of the integrated recycling companys current position, it has the unique
opportunity to capitalize on its robust supply chain capability and technological
advancements. By leveraging a shared infrastructure, the company can effectively expand
its operations while maximizing efficiencies. Furthermore, the potential to utilize
customer approvals as a confidence-building tool will play a pivotal role in its expansion
across various value chains.
The companys strategic focus on establishing a sustainability footprint within aligned
sectors positions it favorably in the market. Notably, the company has demonstrated
commendable achievement s Infrastructure and other sectors.
A crucial catalyst for the success of such integrated players in the recycling industry
has been the introduction of the Extended Producer Responsibility (EPR) regulations by the
Government of India (GOI). The incorporation of EPR for Tyres and Plastics, as well as
nine other sectors of the economy, has incentivized brand owners and material
manufacturers to invest in collaboration with material recovery and recycling companies.
This collective effort aims to enhance value addition throughout the recycling process.
In conclusion, the integrated recycling company possesses a strong foundation for
future growth and success, bolstered by its ability to leverage supply chain capabilities,
technological advancements, and customer approvals. With a steadfast commitment to
sustainability and a track record of excellence in tyre and plastic recycling, the company
is well-poised to make further strides in the market, guided by the supportive framework
of the GOIs EPR regulations.
? There are opportunities to reduce costs, with increased efficiency and economies of
scale.
? There is strong export demand for Crumb Rubber and Reclaim Rubber Compound and the
same is being actively explored, besides the existing exports.
Threats
• End of life / Waste tyres are among the most problematic source of waste in the
world. Incorrect disposal of old tyres can create all kinds of environmental and health
hazards.
• It is estimated that by recycling a kilo of rubber translates into saving 2
kilograms of greenhouse gases (INAE 2015). If not recycled, tyres are an enormous global
problem because of their nonbiodegradability, flammability and chemical composition.
• Cost of the debt continue to be the key issue. Any increase in the interest rate
will have negative impact on the portability of the Company
• Invent of other better alternative product, in a fast-changing global
environment.
• Any increase in taxes and change in Government policies may have negative impact
on the Company
4. SEGMENT-WISE OR PRODUCT WISE PERFORMANCE
The Companys 90% of revenue is derived from manufacturing Precured Tread Rubber which
is the main segment of the Company.
5. OUTLOOK:
In order to meet the changing market realities, your Company has been following the
philosophy of providing the highest quality products and services at the lowest possible
prices. All endeavours are made to achieve possible cost reduction in every area of
operations. Your Companys philosophy to provide high class quality products i.e. full
value for money, to consumers would greatly benefit in the long run. In the otherwise
increasing cost arena, every expense, whether capital or revenue is minutely reviewed to
achieve all possible savings.
6. RISKS AND CONCERNS:
As our products are used for replacement of new tyres, we do not foresee any major
threat from any change in the technology innovation by transportation industry. The
company is obtaining adequate insurance coverage for the assets of the Plant and Field
locations. Since, oil is a key raw material used for tire retreading; any fluctuations in
oil prices are capable of causing fluctuations in retread tire market growth.
The Company has no foreign exchange risk coverage due to its limited exposure.
Compliance of safety requirements and norms placed by different Government agencies is a
top priority of your management.
7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate systems of internal controls in order to ensure
that all assets are safeguarded against loss from unauthorized use of disposition and that
all transactions are authorized recorded and reported correctly. An Audit Committee headed
by a non-executive independent Director is in place to review various areas of the control
systems.
8. DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
The details of the financial performance of the Company are appearing in the Balance
Sheet, Profit & Loss Account and other financial statements etc. appearing separately.
Highlights for the year 2022-23 are as under:
(Amount in Lakhs)
| Sales for the year 2022-23 |
7,993.95 |
|
| Provision for taxation |
21.86 |
|
| Profit after tax |
9.26 |
|
| Paid up equity share capital as on 31st March, 2023 |
420.68 |
|
The financial performance of the Company has been explained in the Directors Report of
the Company for the year 2022-23 appearing separately.
9. HUMAN RESOURCES:
During the year under review, the Company has undertaken extensive steps in optimizing
the man power at the Plant, corporate office and Field locations. Employee/employer
relations were cordial throughout the year. Measures for safety of the employees, training
and development continued to receive top priorities.
10. CAUTIONARY STATEMENT:
Certain statements in the Management Discussion and Analysis describing the Companys
views about the industry, expectations/predictions, objectives etc, may be forward looking
within the meaning of applicable laws and regulations. Actual results may differ
materially from those expressed in the statement. Companys operations may inter-alia
affect with the supply and demand situations, input prices and their availability, changes
in Government regulations, tax laws and other factors such as Industrial relations and
economic developments etc. Investors should bear the above in mind.
By order of the Board For Vamshi Rubber Limited
| Sd/- |
Sd/- |
| R. Surendra Reddy |
M. Ramesh Reddy |
| Managing Director & CEO |
Chairman & CfO |
| DIN: 00294240 |
DIN:00025101 |
Date: 11th August, 2023 Place: Hyderabad
+91-9892691696
